US President Donald Trump announcing a 90-day pause on most ‘reciprocal’ tariffs has given some respite to global trade and particularly emerging economies which were to take the worst hit from the universal plus the reciprocal levy.
Markets in the Asia-Pacific region spiked hours after the announcement of the 90-day pause mid last week.
Japan’s Nikkei 225 index soared by more than eight percent with one expert saying the region is “breathing a massive sigh of relief”.
In the US, Wall Street made historic gains on Wednesday following news of the reprieve, following days of economic turmoil.
However, financial market analysts have already flashed warning lights on a large scale disruption to global trade which could even snowball into a trade war.
“The 90-day pause is only some time to breathe. Sri Lanka has to rethink and readjust itself to face new realities in the future,” a market analyst said. “If Sri Lanka wants to curry favour with Washington, it will have to revisit all the tariffs and para-tariffs imposed goods coming from the U.S,” said CEO of JB Securities (Pvt) Ltd. Murtaza Jafferjee.
The reciprocal tax of 44 percent on exports to Sri Lanka by the US is half of a deemed 88 percent taxes charged by Sri Lanka on US products.
“If these tariffs remain we will go into a deep recession – job losses, large scale non-performing loans in the banking sector, widening fiscal deficit and import curbs,” said Jafferjee.
China and the US have been acting tit for tat since Trump announced tariffs on almost all trade partners early this month.
Trump hit Beijing with an even higher levy of 125 percent hours after China announced an 84 percent tariff on goods imported from the US. However, Trump maintains that “fair deals” will be made with China and every other country.
